Opinion
7507/02.
Decided on March 28, 2005.
Plaintiffs Carol Ameen, allegedly a shareholder in defendant Toughy Realty Corp., and Daniel E. Straffi, Esq., as Bankruptcy Trustee for the Estate of Debtor Carole Ameen, move for an Order: granting partial summary judgment in declaring that Carole Ameen was a 50% shareholder of Toughy Realty Corp. when she filed for bankruptcy and at the time that the shares vested in her bankruptcy trustee when the bankruptcy petition was filed; and, pursuant to CPLR § 3126 granting a default judgment against defendants upon defendants refusal to produce documents pursuant to the Court's July 18, 2002 Order; and for such other and further relief that this Court deems just and proper.
This Court denies partial summary judgment, declaring that plaintiff Carole Ameen is a shareholder in defendant Toughy Realty Corp., and for reasons that are just and proper dismisses plaintiff Carole Ameen from this action. Further, the time for defendants to comply with discovery requests of plaintiff Straffi has not been exhausted.
Facts
The instant case has its genesis in a dispute that has persisted for more than twenty years between a brother and sister regarding various real estate transactions in "brownstone" Brooklyn. It is uncontested that defendant Robert Ameen, on February 1, 1983, gave Carole Ameen a stock certificate for 100 shares of Toughy Realty Corp. [exhibit D of motion and paragraph 8 of Robert Ameen's April 12, 2002-affidavit, exhibit E of motion]. The issue between the parties is defendants' contention that this stock transfer was predicated on various conditions that were not met or plaintiffs' contention that the stock certificate made Carole Ameen a 50% shareholder in Toughy Realty Corp. The stock certificate states that Toughy Realty Corp. is authorized to issue 200 common shares without par value.
Plaintiffs assert that the stock transfer should be viewed as prima facie evidence of corporate ownership and that this Court declares that Carole Ameen was a 50% owner of defendant corporation at the time of her bankruptcy filing and thus entitled to all benefits flowing from her ownership. Defendants argue that Robert Ameen, in 1983, needing capital to improve the property located at 105 Bergen Street, Brooklyn, sought a $60,000 loan from Carole Ameen [exhibit E of motion, paragraphs 5 and 6]. Robert Ameen then states [exhibit E, paragraphs 6-9], that Carole Ameen responded by lending $10,000 to him and he offered 100 shares of Toughy Realty Corp. to Carole Ameen for the additional $50,000. Robert Ameen claims he issued the stock certificate to Carole Ameen, but that his sister never completed the transaction by giving him the additional $50,000.
Robert Ameen's affidavit recites subsequent disputes with his sister with respect to real estate transactions regarding 142 Amity Street, Brooklyn.
Carole Ameen, in 2002, commenced this action to have defendant Toughy Realty Corp. dissolved, with a partition sale of its property, and further sought damages from her brother for misappropriation of monies.
Justice Barasch (now retired) in his September 17, 2004 Order, in ruling upon plaintiff's similar motion for partial summary judgment and extending the time to complete discovery, granted that portion of the motion to add Mr. Straffi, the Bankruptcy Trustee, as a plaintiff. However, Justice Barasch denied declaring that Ms. Ameen was a 50% owner of Toughy Realty Corp., holding, at page 3 of his Order:
It is not disputed that the shares of Toughy and the property at 105 Bergen Street were not listed in Ms. Ameen's schedule of assets [part of her bankruptcy petition]. Therefore, Ms. Ameen cannot claim any interest in the shares of Toughy, which would now be vested in the bankruptcy trustee.
As a result, that branch of Ms. Ameen's motion for a judgment declaring that she is a 50% owner of Toughy is denied.
Further, Justice Barasch extended the time for discovery for ninety days from the date of service of his order with notice of entry, pursuant to CPLR § 2104.
Summary Judgment Standard
The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case. See Zuckerman v. City of New York, 49 NY2d 557, 562 (1980); Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 (1957). Failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers. Matter of Redemption Church of Christ v. Williams, 84 AD2d 648, 649 (3rd Dept 1981); Greenberg v. Manlon Realty, 43 AD2d 968, 969 (2nd Dept 1974); Winegrad v. New York University Medical Center, 64 NY2d 851 (1985).
CPLR § 3212 (b) requires that for a court to grant summary judgment the court must determine if the movant's papers justify holding as a matter of law, "that the cause of action or defense has no merit." The evidence submitted in support of the movant must be viewed in the light most favorable to the non-movant. Airco Alloys Division, Airco Inc. v. Niagara Mohawk Power Corp., 76 AD2d 68 (4th Dept. 1980). Summary judgment shall be granted only when there are no issues of material fact and the evidence requires the court to direct judgment in favor of the movant as a matter of law. Friends of Animals, Inc., v. Associated Fur Mfrs., 46 NY2d 1065 (1979).
Discussion
In the instant case, based upon the evidence submitted in the papers by both plaintiffs and defendants, this Court must deny plaintiffs' request for partial summary judgment. A triable issue of fact exists. Did Carole Ameen own 50% of the Toughy Realty Corp.? The mere possession of the Toughy Realty Corp. stock certificate by Carole Ameen does not necessarily evidence a 50% ownership in the corporation and confer ownership upon the possessor as a matter of law. See Miglio v. Schildback, 303 AD2d 470 (2nd Dept 2003). The affidavits of Robert Ameen and Carole Ameen present conflicting versions of events. Plaintiffs claim that Robert Ameen is precluded from supporting his argument by the parol evidence rule. They conclude that the stock certificate is a written agreement. Plaintiff's reliance upon the parol evidence rule is misplaced since plaintiffs are attempting to prove the existence of a contract (the stock certificate). Defendants argue that no contract ever existed due to Carole Ameen's failure to meet various contingencies.
Troubling to this Court is that plaintiffs' instant motion reargues Justice Barasch's September 17, 2004 Order. Pursuant to CPLR § 2221 (d) (3) a motion to reargue "shall be made within thirty days after service of a copy of the order determining the prior motion and written notice of its entry." Since neither side has presented this Court with written notice of entry of the September 17, 2004 Order, this Court will consider the instant motion, filed on December 6, 2004.
Justice Barasch clearly stated, at page 3 of the prior order, that "Ms. Ameen cannot claim any interest in the shares of Toughy, which would now be vested in the bankruptcy trustee.
As a result, that branch of Ms. Ameen's motion for a judgment declaring that she is a 50% owner of Toughy is denied." Justice Barasch, citing Bromley v. Fleet Bank, 240 AD2d 611 (2nd Dept 1997), found that Carole Ameen, as a debtor cannot have an interest in Toughy Realty. The Bromley Court, at 611, held:
The Bankruptcy Code broadly defines the property of a debtor to include causes of action existing at the time of the commencement of the bankruptcy action ( see, 11 U.S.C. § 541[a][1]; PakoCorp. v. Citytrust, 109 B.R. 368).
The trustee of the estate of the bankrupt is vested with title to all of the bankrupt's property as of the date of the filing of the petition, including rights and choses in action existing at that time ( see, 11 U.S.C. § 541[a][1]; Weiss v. Goldfeder, 201 AD2d 644).
Even if Carole Ameen had possessed a 50% ownership interest in Toughy prior to her bankruptcy filing, she no longer has any ownership interest in Toughy Realty Corp. Justice Barasch found that Carole Ameen failed to list her alleged ownership in Toughy as an asset of the bankruptcy estate. This preludes her from pursuing any claim for an ownership interest in Toughy Realty Corp. In Coogan v. Ed's Bargain Buggy Corp., 279 AD2d 445, (2nd Dept 2001), the Court instructed that "a debtor's failure to list a legal claim as an asset on his or her bankruptcy petition causes the claim to remain the property of the bankruptcy estate and precludes a debtor from pursuing the claim on his or her own behalf ( see, Hansen v. Madani, 263 AD2d 881; see also, Bromley v. Fleet Bank, supra)."
In Basri v. Metropolitan Life Insurance Company, 306 AD2d 302 (2nd Dept 2003) the plaintiff did not list his claim against the defendant as an asset in a prior bankruptcy proceeding. The Court held "under these circumstances, the Supreme Court correctly concluded that he [plaintiff] lacked the capacity to prosecute this action ( see Coogan v. Ed's Bargain Buggy Corp., 279 AD2d 445; Hart Sys. v. Arvee Sys., 244 AD2d 527; Cafferty v. Thompson, 227 AD2d 99)."
Therefore, in issuing a decision that is just and proper, Ms. Ameen, even if she owned a 50% interest in Toughy Realty Corp., must be dismissed from this action. Her rights to any ownership interest in Toughy Realty Corp., if they ever existed, are vested in Mr. Straffi, as Bankruptcy Trustee for her estate. Mr. Straffi, as Bankruptcy Trustee, may continue to pursue this action.
With respect to plaintiffs' request for a default judgment pursuant to CPLR § 3126 violations, it is unclear if the 90 days to complete discovery from the notice of entry of Justice Barasch's September 17, 2004 Order has tolled. Therefore, Mr. Straffi, as the sole plaintiff, has 90 days from the date of service of this order, with notice of entry, to complete discovery and file a note of issue.
Conclusion
Plaintiffs' motion for partial summary judgment, declaring that Carole Ameen was a 50% shareholder of Toughy Realty Corp. when she filed for bankruptcy and at the time of her bankruptcy filing her shares of Toughy Realty Corp. was vested in her bankruptcy trustee, Daniel E. Straffi, Esq., is denied.
Plaintiffs' motion for a default judgment against defendants for refusal to complete discovery is denied.
All discovery is to be completed within 90 days from the date of service of this decision and order, with notice of entry. A note of issue shall be filed by such date. Failure to comply with these directives shall result in dismissal of this action.
Plaintiff Carole Ameen is dismissed from this action and the caption shall be amended to